ESTE - Earnings call transcript Q3 2017

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Operator

Good morning and welcome to the Earthstone Energy’s Third Quarter 2017 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

Joining us today from Earthstone are Frank Lodzinski, President and CEO; Robert Anderson, Executive Vice President of Corporate Development and Engineering; Mark Lumpkin, Executive Vice President and Chief Financial Officer; and Scott Thelander, Director of Finance. Mr. begin. now may you Thelander,

Scott Thelander

Thank you call. our welcome to conference and

Section disclose I conference statements Before XXE Securities of of of and started, Exchange as as to of within of that XXXX Act meaning the forward-looking we get section contain amended. need the amended the will call the Act Securities XXA XXXX today

on connection For release that press a to with third refer our our complete description please of November quarter XX-Q issued this in X. disclaimer, was

information detailed read on XX-Q September more with For to Company, to as as for entirety, our ended our a are encouraged its well filed posted the all about our SEC. listeners quarter earnings in quarterly Form release other XX, website, documents our reports report XXXX the and

and for from financial The of are and our we’re certain regarding regarding call from matters to of non-GAAP and turn call comparable Our these measures most release. Frank. a from includes remarks GAAP over will operations. Frank measure Mark remarks to under Robert the activities profitable earnings earnings content release measures. remarks will our Reconciliations performance, the directly growth, now today’s include financial in non-GAAP regarding how I contained financial positioned

Frank Lodzinski

to on Okay. Thanks, Scott. Good morning everybody the call.

closing. say the begun since been really terms and completions significant position We drilling in operated our that our to X first Basin our a closing last the rig we’ve full hit that May. of have pleased we now of stride under the We’re after quarter with of running pace belt operations to just in Midland

completed, wells therefore, inventory throughout quarter have as expect established wells an completed. be a be XXXX and of production beginning growth this steadier the to and We of pace we initial to five completions,

operated with upside Wolfcamp economic benches other inventory potential and higher B identified Wolfcamp targeting Basin locations XXX over gross positions, deep significant on A a three in have We the with benches. Midland locations our position, operated of only in

nearest drilling Specifically, that in C and very seeing have of operators you a of we that’s in quite the is term most the in activity me our counted and we’re as one operated of from know, things completing Wolfcamp not Reagan County which, wells, other exciting locations. to bit

will in in We C drilling as a acreage. results future, see well perhaps offsetting consider additional XXXX the we our

track. Friday. other accomplished perhaps in to you be non-operated a very growth Beyond in focus benches our delineated are find that on corporate additions our see about of In divestiture as continued tell and the inventory operator, should presentation last But the on transact put corporate well, our the our Basin employees, summary, of in both we date, exceptionally we with buyer a C, are of near-term will future. we of activities. assets could we’ve Houston streamlining in our and some potential shift also aside our we considering Midland, are laid Mark Basin-focused out our updated the kind and our plan and to current an in pace Bakken executing Those just the webpage and on Midland the price. consistent from is Midland in streamlining acceptable

the Lumpkin I’ll EVP third and growth, will us and to financial of continue now look who results provide towards responsible for and organically will joined stewards summary while our CFO We operational capital. you as and profitable recently introduce quarter both XXXX. brief our through M&A a of financial Mark of being to

Mark Lumpkin

in you, a day Thank things are per really standpoint, X,XXX production quarter. the From going production Frank. with BOE well third of

from degree, resulting lesser reduced our in net million recently that resulting to Basin, we’re from production close the million offering We’ll sheet. further Harvey. order expecting per an limited to a proceeds our strongly year. to third of shutin XXX as remains reduce is enter Midland This completed frac in we guidance shares enter current production schedule with BOE strong In equity of of resulted certain estimated debt activity ourselves on quarter, and completion after wells Hurricane X.X despite for offset to due $XX.X our XXXX to strengthened place, temporary to the day after XXXX, expenses. we balance position having already Assuming meet in of this the

the assessment Our would second other of with flow in XXXX, in significant to us well the to our our the returns positions in liquidity optionality pending high-margin rig and XXXX current XXXX. complete commodity price acquisitions add acreage us to that allow in to drill cash and and a Midland financial And properties projected continue add environment. Basin

about and of production properties Frank cash builds we’ve part we’ve about streamlining XX% mentioned, our of from As The producing that gas. about realized XXX corporate day per were divestitures. BOE comprise contributed million year-to-date, which of proceeds gassy, low-margin gas $X.X that of legacy sold

per in significantly we XXXX we’re quarter G&A periods. value. LOE further company for corporate cash-based maximize focus financial possible on on the order strongest $X.XX we BOE, returns delivering to and were both level economies shareholder $X.XX, the creating improvements As in seek and having were on per positive a a projected, for in down as our performance. from this the third prior impact respectively that We’ll basis which are clearly metric BOE

XXX% which third with adjusted barrels September sheet net very balance $XX.X oil of Production XXXX, increase XX% quarter. remain XXXX. to gas focused million the a XX% production As going of reported liquids. quarter of million of of consisted totaled the Capital million also XX% EBITDAX third week averaged for reasonable $X.X And quarter last total approximately quarter revenues of ended $XX.X gas and second keeping expenditures to We of relative XX, reported forward, for oil, I compared the and XX% million. for $XX.X and per leverage. our mentioned, quarter and on day, natural equivalent income clean the represents the a X,XXX a increase, XXXX we

X.X X/XX million total of and to raise. equity As recent measured from it times, end debt third was cash on times proceeds debt our – application exactly of only million At we leverage or quarter quarter, forma approximately had $XX EBITDAX, and of by bank to $XX the down of pro the our annualized for was the X.X at hand approximately outstanding.

and $XXX Robert. for $XXX borrowing I’ll Our remains proceeds forma million. lending our million, reserve pro about base that, at end under quarter facility equity over base of is the to With at it turn liquidity

Robert Anderson

press about those our of of October Midland in Basin. a information activities, lot an most with Thanks, operations you the of on released especially Mark. release that We are XX aware

production guidance guidance day have X,XXX BOE BOE We by maintained due while exit rate BOE per asset that X,XXX to our to of day full-year XX,XXX divestitures. a Mark our XXX XX,XXX to per the these lowering slightly to legacy get exit mentioned to production day, us rate

and a three As and end. we the these the waiting flowing of completed outlined wells month operations this release, these in have on get in Midland of by year back that upon our the Basin. completion our majority earlier wells exit at expect least on completions to of these dependent wells began is first X completing rate We

completion reduction due $XX XXXX acreage and in our of of initially $XX in to capital XXXX budgeted by million as reduction will spend of our drilling $XX expenditures $XX and based land benefit Eagle total, agreements in as second near-term. land, budget joint as capital in we our respect approximately million a that in infrastructure trade in to Basin. million With million on a and us the and approximately focus to largely the quarter much development Midland in by for the the won’t third reduced we on also the We result Ford our

the are We acreage demonstrated on continue front presentation by trades as Reagan these in our highlighted recent as Counties, update well trade Upton Midland recent to operational as see most which on our success corporate in and website. two Basin

and pursue drill longer us inventory. We our that position economic to to continue and trades increase acreage laterals acquisitions

rates, a rig pace rig and oil is second day where working single number lateral. about X,XXX were XXXX. in a feet adding These in XXX BOE about with be reached in XXXX a in day we to Midland of X located with These up, averaged to over We X-well run ninth in County, hold and per the per pounds stages Basin, on should XXX of continue XX were number brought XX% of XXX% one wells the We pad at XXS working wells. XX% six lateral which actively unit efficiently still four, X,XXX number peak days, we and in to examine Midland B order to and X Reagan interest The unit Upper our and or we and on a X,XXX day cleaning IP per completed are five with and throughout wells down Wolfcamp wells interest. average to the and number second in the has that wells minimum are we an average currently past operate continue Hartgrove the approximately. XX foot will the average have wells third go well three BOE with preparing Lower. are well X length the XX% per online, These the choose end a oil. current two in plans wells XXX maintain per drilling B with the and XX operationally of eighth The wells proppant in TSRH the quarter, foot At path. completed Basin BOE a our this rig

between of wells, there the mentioned, crew in and completing phase be will year-end currently we the frac five with now first As the which are these. completion

while two interest. three on in XXX, which X-XXX are working XXX% which the a working have Parrish Texaco X-well last we pad first WTG WTG our the being the wells The interest single-well RCR the and are wells, XX% X-XXX pads all all are

by Moving to on Eagle start wells later Gonzales on the Crosby to our drilling wells over six Completions XX-well Ford, Southern in Unit. recently month. County drilling XX track are in the finished this program these we

JDAs paying operational joint expenditures savings Basin. in have acreage. estimated capital share County the in a As two to of agreement adjacent earn on detailed $XX resulted refocus our an Midland XX% the partner in development of the capital quarter, Earthstone is allowing CapEx to update, into and interest our we of third majority Gonzales million, the a second our in The further of our unit during where working financial entered Southern original

the per And it as soon as third the year our as in process XXX day. mentioned, Bakken I’ll turn Bakken sale non-op potential With could of evaluating end. assets quarter, we occur to the of during a Frank. are which BOE produced Lastly, assets back that,

Frank Lodzinski

Okay. Robert, good summary, thanks.

line, I good view that I the on quarter picture future. a this folks and that want to provides you a Earthstone’s tell all For you believe solid into

our and to our thereby, We’re metrics, operating our of our and profits. locations, working our everyday increase reserves, acreage expand increasing improve margins inventory

have base strengthen of our our was build we and integration We to ability momentum begun the grow our the competitively of our to of in Basin. divestitures and these contributions The into with Midland Midland the pleased Bakken assets recent the sale with Basin non-op small significant assets assets are further Midland Earthstone. potential personnel will

efficient positions, While acquisition, each and trades our that we’re more laterals current we’re in working pursuing can longer result another major towards and day enhance acquisitions operations.

and significant line balance acquisitions. with and our thank and you we’re for investors, liquidity and our strong offering, our as and concludes We recent now support. a well-positioned and that remarks, we’ll to questions. our the bank value equity Finally, prepared result of pursue to Operator, employees, all our help do open your group, equity a bolt-ons appreciate sheet

Operator

Instructions] you. [Operator you. Thank Thank

Our with first the question. of be with question will Neal proceed line Humphrey. Dingmann Robinson Please from your SunTrust

Neal Dingmann

Good gentlemen. morning,

Frank Lodzinski

Hey, Neal.

Neal Dingmann

– well the designed Robert. the first on wells question day for my a in I’m big those, the I mentioned there’s I there completion? I think that talk by question, as around a about I about know probably you talk something and have coming did especially with was pretty for mean, Frank is, you guess it XXXX? about doing could think about think, – just Frank is month question you ago been they Or is y’all I the there five going that you my – or well sure guys first I up. if probably saw had guess, my – that maybe or Reagan. Robert, completions that and enhanced you Can and what, so just in

Robert Anderson

Sure, the don’t Neal. all that frac talking on We well have details you’re about.

similar to this of block it. it year. well looks probably WTG our well WTG earlier It’s close was our We’re to aware completed acreage, of very very so that

would there fracking three that to So our are first we’re we all the would close down wells about that vicinity same. that look in hope and expect that

has We had the proppant. and spacing design changed we’re technology in bit. the clusters And few still far much down what the a little up As we’ll a really triangulated each and the has XXX-mesh pathway the pounds to but to the of more other frac current as XXX stage percentage in kind lateral not are than stage, to much designs we’ve road, foot along fracs maybe got as better the some not coming goes, changed. X,XXX that, may our of the see. X,XXX using But bold of fracs with per XXX foot area,

Neal Dingmann

because guess plannings mean offsite for think talked I barrels upcoming done operators. that you the – I now or going remarks I of that will about or think were Okay. was – talk the the day in Do And prepared then months, could some mentioned, – you the be see, fact, on? the from you it similar much offline in operators, you XXX a off of you’ve Frank, I you there about

Robert Anderson

type fracking the roughly. had So and came that three-well while In that, any where three in is from that barrels first were pad shut offsetting XXX have wells have offsetting the these we should a directly that what impact. are three-well happened wells, we that’s don’t pad that we we same we of was a

to year a we taken well there, our going in don’t may may that, have got I we really may wells. we’ve to impact because think so get closer. a year that into be play a we haven’t at it’s Although some working of offset shut interest, adjustments that, very the lower where at by but at to off Again, fracking interest, do the we we’ll some And we’ll the the of we much. pad to little see account two-well then that as start WTG, it’s end

Neal Dingmann

Okay. And then just lastly…

Frank Lodzinski

Hey Frank. is Neal, this

we in this this now, mind of of we’ve with conversation. out quarter some a Robert’s that kind bit – our conversation and we’re of a morning the Midland in first Please this of that had when full few that, perhaps One anticipate and right schedules, our hopefully, had this I is little we our folks schedules. offset all bear And all wells. where we me tweaking have tweaking, can tweaking of improve declines anticipate our better we’ll some let might plans our and of as our say temporarily or so fracking forth, production while were

to Of as have sure into but close and course, that other as what acreage, try doing we’ll guidance accurate offsetting be take is operators don’t our make to consideration that we access know possible. are to to going our

Neal Dingmann

it keep there. guys. Very good. I’ll Thanks,

Operator

with from the with Wangler Our of Please your Capital. is question next line Jason proceed Imperial question.

Jason Wangler

this the in morning, your the you rest five good mentioned online think these of even wells the XXXX. I Robert, prepared getting and in year timing about Hey, guys. remarks maybe

that? tight would And the you completion factor, online? do swing guess, in at the calendar? on side be how those what business, those you look And the of maybe timing all the is have the of getting As I

Robert Anderson

are out that well Well, and then and drilled a planned the locked executing of on each the so got fracked just these year-end. them of five online, timing now we’ve going the year in. be of end getting on It’s and before are three matter between of pretty put to

The across other be we’ll right two, year-end. fracking

little walked inventory haven’t get with match from pretty been can we as companies fluid that an still using. opportunities in worked to we’re their standpoint. and XXXX a that out being of everything’s match we windows down. wells, to-date, us an see of is wells, service we’ve anything So able company inventory of But schedule up find kind a frac ours. or a well timing well we fortunate we out to – the And get very lining for of usually

Jason Wangler

rig on just this guess, second be think Maybe few assets? going maybe And look with that weeks XXXX, as Okay. and one plan? you as you rig, where but mentioned, a you’re incrementally of of the focused, working the have the development for as program. at you would to thoughts just the be you a I your where well, talked of just about kind ago rig we And about kind that

Robert Anderson

Sure.

will our the County. Midland between around We have a drill timing in just have started County balance wise we about and probably it little like pads in would figure program program up one worry during a that’s all to to rig air XX obligation bit wells be second in rig around, in those we’d bouncing area so half County. it from rig Midland the bring to XXXX, be that Upton then trying of that And and where the and point have all and and the perhaps with If about. Upton County, at not Reagan to but Reagan be some year, are with still focus we’ll multi-well in and

Jason Wangler

Okay, great. look forward about to hearing you. it. I more – thank I

Operator

line question is with Please Jeff with the next of Our your Grampp Northland question. from Capital. proceed

Jeff Grampp

terms how your the sales and getting do kind guys of you service a on in that? holistically getting of crews procurement kind ducks price Good bit in and Just equipment? just more oil kind the Bakken of morning, guess, maybe that off what to guys kind question more see second need building rig checkboxes Jason’s you or of comfortable of in the, feel that? of things guys. are done? how Permian, stability availability it adding a I little side? wondering Or Is on to Is Kind the discontinued row of of that

Robert Anderson

take you want you that me want to to? or Frank,

Frank Lodzinski

know, framework collective we'll conceptual this our two And give go ahead us, in don't always you agree it. my between Jeff, as of what take that is. Go then thinking I'll But cents. don't in, ahead, kind give of you you why forth. the we're and so we Well, two and Robert.

Robert Anderson

Okay.

So the definitely can land we to second additional sooner first be would work than rig later. put a we opportunity, would look thing if some then to

to XX – given prices in don't and direction they're prices firm results, that's I our in not driver. commodity this think I pretty going are at but right good. point that get going order start to quality know that the out. working economics lastly if think up to when the our the who can trying and And now in right look be to is through necessarily figure we I out us then and we're only in the range, help effectively, drill making able have services to might and sure we ability

Frank Lodzinski

Jeff. Yes.

as told know acreage forth. on acquisitions supplement As we're could them, and and clearly and positions, some focused you additional with everybody, and plus we've so that our bring so acquisitions, complement forth. existing And production

I another, So excluding bag way acquisitions in to see one the that we or like rather second a would than later. fact rig XXXX sooner will

that satisfy drilling hit the obligations I drill a is also can have building think on and Midland efficiency we're but go continuously, on in path. pads do we Robert obligations. we'll in drill we because efficient running while you and but Reagan nail some The in the one multiple also drill probably well thing focus one least wells we'll head on rig given Upton, forth if in

second second second year. quarter in of on would or end of sight Midland there to clear the and maybe year in by So a you of if the the druggers, a having focused the rig perhaps Upton I line had give quarter of the County my I

available. mealy-mouthed that or $XX, noncommittal I of $XX, the be clearly, price was thing the $XX time $XX, of $XX that's in depend God though deck there the if it last is and the you. also or go we some adversely is But at because economics or goes affect last starting to quality ever years us, deck services aren't and whatever As the far we're But even bless economics that. on and can with us $XX the But going couple up. locks from do as price $XX, price looked, a to great on it other services. going for way $XX down have of kind The of to up going, starting out

line there doesn't industry and second sight commodity that takeaway said. of rig without acquisition and a I I price end crater in of guess long that combination second Robert the associate So of the With bringing as with what the a the acquisition, as deck by it and a the is both clear quarter.

Jeff Grampp

the momentum building all you recent we've kind thought. I my Okay, into had, acquisition things. guys in of maybe know the still have perfect. to can generally conversations are conversations on I of kind it's of early easier but follow-up have side talk kind those this can for appreciate maybe And trending? you about those harder the recent how strength or Are just those been with Or about going? crude? of how

Frank Lodzinski

and give two – we and let land. everything to But $XX cents. on forth my $XX, of $XX, we're reasons, merger recall, can down in impact. while something these million add I'll that in the we us why we about – to I, focused an of you And clearly term the more of going than to price we impact prices closer not and that another to the and adverse I trades I'll and dropped just so one going appreciably after terms kind is much stalled do of acquisitions, forth, the Robert's where May so near in that's lateral had just which if is spent one, kind closing, digesting which so get why which were Xth length I think clearly, discussions

barrel. as will, talk $XX or anything having that? thing to conversation [indiscernible] a to prices up, want or there, a there's add if to there it With – just the ain't about Robert, it, that seems more you saying that $XX sellers opposed out the you moved $XX

Robert Anderson

on right working to about that side information we're on. enough picking the you No, we're have in I nothing – any not is along it solid – there's got deals up that A&D, far think there's new activity but the

Jeff Grampp

That as good. guys. always the Appreciate sounds Okay. time

Robert Anderson

Thanks, Jeff.

Operator

of proceed question. from is the Kelly Seaport your with Our question Global. next line with Mike Please

Mike Kelly

Hey, guys, good morning.

acquisition towards deal mentioned you and significant front, the bold would what Frank, next acquisition, something really that's on in hear to the how of kind Thanks. the your just on is prepared post more criteria on that you're love looks remarks that Speaking thoughts working larger in and significant nature. like significant your

Frank Lodzinski

Well, not don't we're organized – and want to bunch you cowboys I I want methodical don't on and anybody a line bunch think forth. think and we're around the to here a of of focused and so

a So But to pushing a from the with out and might goal just X something our XX,XXX may if this be we've this I you anybody there. – less two we months XX to that operated. another a gone I'd XX at. on want of accomplished months, snicker but fibbing Texas fracs said, told BOE be day I to than the one. that position. years, didn't Whether acres, done a have don't these of and will look we've the goal in counting can West acreage with tell. doubling We're take majority is what our non-op laugh acquisition be In X,XXX you that time in that not last at And it

and don't our acreage if double say set to that's the shareholders, what to we'll appropriately, for So generate economically, profits the hell, kind you of the forth, our and try goal. so bar

you there have So it.

slap or but months XX in the back the on goal. that's upside us head, us pat the either can You

Mike Kelly

of side you over million switching this Bakken million maybe the lot guys, can how a you? sell the to number and you characterize just on it. potential there's have just buyer territory? this And with sense could to undeveloped wells worth hype And the with just kind EURs in for looks and eyes type barrel X.X a for associated that I'm that the on interest... position your of now of to much been X great. like for trying this mean, maybe I here? be Is locations around Okay, get of

Frank Lodzinski

one? one PowerPoint there out in buried take out our is it's of don't Robert, there that's why slides in out that the been think I there. you and

Robert Anderson

the a It's on we in that which Okay. Mike, BOE for it's you're the these of bit consider you probably good the in kinds little we that it's, deeper part is little maybe really more non-op – to had quarter, developed upside. third and oil a that versus little said, like given in there most helps in XX-XX it's got given XXX the day I lower metric a about but cut best those a up gas area A drive County so component, McKenzie core. because acquisitions EURs.

think you compare particular are that value might – at give – transactions recent prior and can rate close I in to So look and non-op a that our you to and it range.

Mike Kelly

thanks Okay, perfect. right, it. All guys. Appreciate

Operator

Wyatt your next of from Ben with proceed is Stephens. line question Our Please the with questions.

Ben Wyatt

magic do what the frac rigs, three it a Hi, of a is things. What's crew? of get for rigs? Is good guys you morning go to kind full-time Just two completion on sense guys. the before of of trying Maybe number Robert, you, kind just is. to side it back get that

Robert Anderson

three. maybe and two Definitely

only we potential something of up but built a the an some there running get saying running harder crew sounds and team that. only had think one to is some least they're into really one a and maybe out good. we're discussions frac for we a already crew on at we we've full-time if up frac put running committed It So It's XXX% other practice, I before rig little there inventory rig. like with time. rigs operators two But having need

Ben Wyatt

And sense LOE reason continues of where potentially over versus Ford asked of to where to could just the us at I the the get grow rate Maybe head here Bakken? a I on maybe side operating give head get cost sense where side Bakken, just it a year Eagle as of rid maybe LOE of quick over of could is on – why that. Appreciate just is trying to lower Midland things, cost just it. Got and so. next Midland switching guys things, a can guess versus the you or

Robert Anderson

$X got But BOE. into driven Ford position to in you for a in. by is per really rates. basis. on amount vertical that's Midland is that innovation. to I'll water and we've disposal. operated is the And high per Sure. X times disposal, initial When is inexpensive that's it's Eagle number a operated basin, start access now, get something cost in else Midland jump basis Basin, an where running low Obviously, range. saltwater BOE $X to by again, BOE. wells – to the The on X.X also in the driven That's let very which our $X times within somebody that have the Basin, important per we But

get into higher, a they're of higher the wells, If Bakken a range. operating north us, little $XX, for The $XX $XX cost. just a Chalk little is you bit

So the cleaning noncore at get assets, is rest see of in legacy our to lower than that target out that. us and $X you'll the – and range, Frank's

Frank Lodzinski

Yes.

think the pretty an what reengineering and just valorem what workovers, workovers, part operating LOE the ad much, are said, and to called and recurring including which of I but we've the clarify the fully that's expenses, loaded inherent on Robert business normal lease taxes.

taxes severance the those loaded of the all up show fully of So financial it's things. course, kind And separately statements. in for

Ben Wyatt

how that guys say maybe – hedging are way if how crude's on Maybe discussions kind of now more. you helpful. having That's just – guys. With different of even he's curious through you coming on board, stuff, ask north thinking one just kind the almost I brought guys Mark Good are Yes. if just of XX. thinking, if now, a of can hedging let's

there. thoughts your curious just Thanks. So

Mark Lumpkin

Ben. talk it’s sure, Yes, to you. Thanks, good

production hedges. we certainly, PDP, and north with happy I just week, think to on in feel answer to having XX with forget XXXX. the your of would team portfolio of base And to I put the out on certainly chunk PDP. XXXX pretty is We're historically about First XX little I But some the little to the that. bit well-hedged a on oil are we to as that of the way up, side, with have on really, wells moved further than having relates layered in Certainly, hedges, chunk first question, we and the the probably economics the as good here the goal is have to done. throughout a more a fairly I months mean, always think good on for but locked I which hedging all, really recently, we side well-hedged XX, our have, has past our here. in our prices be of may on look it and year, bit be add drill out, the we of XXXX

Operator

Thank you.

question. the Ron Johnson Please Mills is question your of next Our line with Rice. proceed from with

Ron Mills

already, Reagan spacing? you lot's down A provided on utilizing morning. XXX-foot downspacing your the provide County wells. What's terms plan more color into Robert, And results your Coates but presentation, chart do in a on you incorporating that how you on development that some from there, been Good two in answered that program? Can from? those of

Robert Anderson

target. we same the other Ron. that wells compared X,XXX bench apart wells from or are in to that existing are wells standalone The Sure, probably feet

of that completion, production, same more this as wells that you and benefit at two actually kind thinking oneoff-type Maybe development those both close are a like us we have these that time. wells, of wells just that but you us happen that gives make So and bit that feet increase that, having and wells sense sense an kind give entire the you least frac stage. nothing being want those spacing in XXX might little design there's from that – develop and changes at fracked two were us of validated would an what being a a our block, at you when rethink of

Ron Mills

current your XXX-foot Or there? based there on is And upside spacing? is inventory

Robert Anderson

around and XXX-foot or have in on spacing that, the places to work, in more based people – or certain then look going successful spacing. whole lot really to XXX-foot was it's But XXX. based of them development It even thereabouts and a testing There's basin, us plan No, we'll prove our to locations. is. and be that's we to all whole

Ron Mills

if that the testing I new already the terms those benches, of included incremental me. And added D then B of Wolfcamp now presentation, in know a at in show In B don't Wolfcamp you your upside added And Great. you in the zones, things benches in is inventory? and benches your B. two also jumped those Are on you added in going what additional you out to zones show couple mind?

Robert Anderson

Okay.

another just those what And an talked A log, benches inventory The is, then Lower. zone. obviously well operated type a call B the call the locations And So not to Lower. also in inventory. – about in areas, And XXX. counted already operators not is and Wolfcamp within not have intervals, B our other we've is D. decline; counted. we've of operators so tested additional of A Upper as our are in The and not it's that. about the slide inventory that got counted same some B those in in chosen are XXX counted an bench a it B our those D, additional one has additional and on show Upper What is Wolfcamp Frank as where on C we again,

Frank Lodzinski

[Indiscernible]

Robert Anderson

for public as goes, that us. other continue C within far the A. see soon. drill County let we're been benches they was B, some and outside C of time does to for how put out wells there companies, outside Reagan wells. instance been and watch the We're terms relevant doing drilling say in two of delineated operators going to us completing in operators continue and – and as probably are tightly I of going The – by There's has developing we're what developing most wells in there are interval really a to testing Ron, those one the going the the what good is multiple any in some C that B kind testing to to the of we're

In there's to adding bit are inventory, have to completed our end, at we'll directly hopefully, that two look fact, a And C three we all news offsetting but are we have. little C wells year operators from that start and by those of different acreage bench wells.

Frank Lodzinski

Frank. Say, Ron, this is

didn't there, be. point a of I – at one the you not the of XX, Robert, zone Page when C operated. in to it, We've don't the give and to of locations, and for, did we've if have XX we But feel PowerPoint the non-operated. Page we listing recall with But know be. to out mistaken. pages. probably forth. couple not what have that – slides. had and you will our That's goes put as we this And we C upside had just I for but out, Just – and if counted I'm put any a XX associated you could so the you around correct I'm get on when mistaken could has some where a not that Anyway, we and Page benches if Page the I'm by XX, Ron, counted kind where far me XX look has upside operational as potential if

Ron Mills

continue on Great. And quite that of then one Anything announced the while, they – appreciate swap really for swaps. to acquisition different as of the A&D acreage all could completed, once a acreage you last the a appear that provided you've those going couple take me. one on, have commentary additive. I opportunities you but things success else evaluate

any focused in are you swaps? if where you're curious and additional process particular on area that on, Just there's

Frank Lodzinski

and clearly, of that do two trades length just the have – and proximity the on clearly, we want strand like to to locations swaps in the and that PowerPoint, Well, in is in lateral existing and number the what do the acreage. our reasonable those your improve adjacent you improve bolt-ons, acreage positions

on to thing. working quite by been cooperation seems daily. accomplish the we're time, in a time be what's all refreshing that amount having companies And is involved there the to for same some to Eagle Ford So me, good of the

We've small, a do – you and corporation I on start keep important clear and a we've small bigger so Robert that the results can done, up can that, the perhaps an inventory And look a that. us. accretive working incremental and if team of it's deals. to take But are set chart here on So in we'll very what relation basis. for very overall focus just Mark to at that, but chasing

Ron Mills

you, guys. Thank Great.

Operator

closing for to you. back Thank floor time, will turn the management At remarks. this I

Frank Lodzinski

Well, this Frank. is

to all of found So thanks the time who dial you in. to

this focused As on I everyday. mentioned, we're

for game to Houston and thanks house. We have get of it because shout cleaning in. in out calling a our people The a takes folks to contributions these plan. and things folks those Midland, here We're all in of done,

Operator

concludes today's This conference.

participation. time. your You lines Thank may disconnect at this for you your

Earthstone Energy (ESTE) 6 Nov 172017 Q3 Earnings call transcript